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Wednesday, February 18, 2015

Arbitration & conciliation act - vagueness in the arbitration clause incorporated in the sale contract dated 2nd May, 2011, there cannot be any arbitration and therefore, this petition made under the provision of Section 11(6) of the Arbitration and Conciliation Act, 1996 fails.

                                                              NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                         CIVIL ORIGINAL JURISDICTION

                      ARBITRATION PETITION NO.6 OF 2014


M/s. System for International Agencies       ... Petitioner


                 Versus

M/s. Rahul Coach Builders Pvt. Ltd.          ...Respondent


                                      1


                              2 J U D G M E N T


ANIL R. DAVE, J.

1.    Heard the learned counsel.

2.    The arbitration clause incorporated in the  agreement  regarding  sale
contract dated 2nd May, 2011 reads as under:
"Disputes: In case of any dispute arising out of this agreement between  the
parties, the same shall be referred to the arbitration under the by-laws  of
Indian Company's Act 1956 and all amendments of  this  Act  up  to  date  or
shall be settled and decided by arbitration as per International Trade  Laws
and all amendments of this Act up to date."

3.    Upon perusal of the said clause it is very clear that the  parties  to
the agreement had agreed to refer  the  dispute  to  arbitration  under  the
provisions of the 'By-laws of Indian Companies Act, 1956'.


4.    The learned counsel appearing for  the  parties  had  fairly  conceded
that there are  no  by-laws  framed  under  the  provisions  of  the  Indian
Companies Act, 1956.

5.    Though an effort was made to show that in a  reply  to  a  winding  up
petition, one of the parties had agreed to refer the matter  to  arbitration
but there also there was vagueness and even that willingness  to  refer  the
dispute to an arbitrator cannot be said to be an arbitration agreement.

6.    Upon perusal of the aforestated clause, it is clear  that  the  clause
with regard to arbitration is quite  vague  and  as  there  are  no  by-laws
framed under the provisions of the  Companies  Act,  no  arbitrator  can  be
appointed.

7.    On account of  the  aforesaid  vagueness  in  the  arbitration  clause
incorporated in the sale contract dated 2nd May, 2011, there cannot  be  any
arbitration and  therefore,  this  petition  made  under  the  provision  of
Section 11(6) of the Arbitration and Conciliation Act, 1996 fails.

8.    Needless to say  that  it  would  be  open  to  the  parties  to  take
appropriate remedy in accordance with law.

9.    The arbitration petition is disposed of as rejected.


                                              ............................J.
                                                              (ANIL R. DAVE)
New Delhi
February 16, 2015.

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